Hong Kong Internet Stocks Join The Usual Suspects’ Lineup (AI Picks & Shovels)
5 Min. Read Time
Key News
Asian equities were mixed overnight as AI "picks-and-shovels stocks" in Mainland China, Hong Kong, Japan, and Taiwan outperformed, while Indonesia was down.
The Hong Kong and Mainland China rally was very narrow, as the usual suspects within the AI "picks-and-shovels" category outperformed, along with Hong Kong internet stocks (not a typo!). Internet stocks were higher, driven by several catalysts, including buybacks and potentially some recognition of China’s AI model success. AI "picks-and-shovels" stocks were among the few winners in both markets today, as technology hardware, communication equipment, and semiconductor stocks in Hong Kong closed higher, along with electronic equipment and semiconductor materials in Mainland China.
The hardware rally drove Mainland China's Science & Technology (STAR) Board higher by +3.85%, Shenzhen higher by +2.08%, and the Hang Seng Tech Index higher by +1.8%. Meanwhile, banks and insurance weighed on the Shanghai Composite and Hang Seng indexes. Positives included Premier Li and the State Council meeting to receive an update on AI development and efforts on implementing AI+.
Lenovo gained +8.18% after media reports of its role in supplying Samsung and SK Hynix. Hong Kong-listed internet stocks were also among the few winners today, as Tencent gained +2.28% following yesterday’s news of a significant purchase from ChangXin Memory Technologies (CXMT). Tencent also saw strong buying from Mainland investors via Southbound Stock Connect. Meituan gained +1.26% as the company bought back stock for the first time in a month. NetEase gained +1.5% after becoming eligible for purchase by Mainland investors via Southbound Stock Connect. Kuaishou gained +1.46% on continued AI spin-off chatter. Baidu gained +5.08% on its AI chip unit spin-off. Alibaba fell by -0.16%, as Mainland investors were net sellers via Southbound Stock Connect.
CATL gained +1.10% in Hong Kong and +0.17% in Mainland China as the Ministry of Industry and Information Technology (MIIT) reiterated its policy support for the battery industry. Investors gave Tongcheng Travel, which fell -6.25%, a thumbs down on its announcement of buying carpooling and taxi-hailing firm Dida, which surged +88.19%. The Mainland-listed Luxshare gained +7.81% after announcing its upcoming Hong Kong listing will see 383 million shares sold to fund AI efforts. The Mainland’s most heavily traded stocks by value were dominated by the AI "picks-and-shovels" companies, i.e. tecchnolgy hardware and chips, while value stocks underperformed. The release of purchasing managers' indexes (PMIs) also gave the trade some wind, as discussed below.
June's “official” survey by the National Bureau of Statistics Manufacturing PMI was 50.3 versus May’s 50 and expectations of 50.1, driven higher by new orders and production. The Non-manufacturing PMI was 50.2 versus May’s 50.1 and expectations of 49.9, led by a slight improvement in the service sector. The China Emerging Industries PMI increased to 53.5 from May’s 52.9, led by equipment manufacturing (This is a CLN exclusive, as Bloomberg was not updated for whatever reason).
Autonomous driving technology firm Momenta’s upcoming Hong Kong IPO on July 7th is garnering attention due to respected cornerstone investors such as GIC, Fidelity, BlackRock, Mercedes-Benz, and Oaktree. Yicai reported 65% of cars sold in the last year in China include the company’s software. The company generated revenue of RMB 743 million ($109.4 million) in 2023, RMB 1.3 billion ($ 194.3 million) in 2024, and RMB 2.4 billion ($350.0 million) in 2025.
Hong Kong will be closed tomorrow for the Special Administrative Region Establishment Day, though the Mainland market will be open.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | 1.8% |
| Hong Kong Turnover | HKTurn Index | -2.3% |
| Hong Kong Short Sale Turnover | HKSST Index | -2.3% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 18.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 752.90 |
| China (Shanghai) | SHCOMP Index | 0.5% |
| China (Shenzhen) | SZCOMP Index | 2.1% |
| China (STAR Board) | Star50 Index | 3.9% |
| Mainland Turnover | .chturn Index | -7.1% |
| Japan | NKY Index | 0.9% |
| India | SENSEX Index | -0.3% |
| Indonesia | JCI Index | -3.1% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | 0.9% |
| Philippines | PCOMP Index | -1.6% |
| South Korea | KOSPI Index | 1% |
| Taiwan | TWSE Index | 2.5% |
| Thailand | SET Index | 0.9% |
| Singapore | STI Index | -0.7% |
| Australia | AS51 Index | -0.5% |
| Vietnam | VNINDEX Index | 0.3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 113% | 138% |
| Advancing Stocks | 114 | 2599 |
| Declining Stocks | 409 | 2463 |
| Outperforming Factors | None | Liquidity, Growth, Momentum |
| Underperforming Factors | Low Volatility, Growth, Quality | Low Volatility, Value, Dividend Yield |
| Top Sectors | Tech, Communications, Industrials | Tech, Communication, Real Estate |
| Bottom Sectors | Staples, Energy, Utilities | Energy, Financials, Healthcare |
| Top Subsectors | Tech Hardware, Paper/Packaging, Software | Communication Equipment, Electronic Components, Semis |
| Bottom Subsectors | Food/Beverage, Petroleum, Consumer Staples Distribution | Construction Machinery, Coal, Marine |
| Southbound Connect Buys | KB Laminates, Tencent (Large), Knowledge Atlas (Moderate), Kingboard (Small) | N/A |
| Southbound Connect Sells | Alibaba, YOFC (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.09 |
| Communication Services | 11 | 2.3 |
| Consumer Discretionary | 28 | -0.25 |
| Consumer Staples | 13 | -4.84 |
| Energy | 6 | -3.01 |
| Financials | 25 | -1.62 |
| Health Care | 16 | -1.78 |
| Industrials | 22 | 0.25 |
| Information Technology | 12 | 2.36 |
| Materials | 14 | -1.65 |
| Real Estate | 7 | -0.87 |
| Utilities | 11 | -2.21 |
| Mainland China Listed | 386 | 1.17 |
| Communication Services | 8 | 1 |
| Consumer Discretionary | 26 | 0.17 |
| Consumer Staples | 19 | -0.79 |
| Energy | 12 | -2.55 |
| Financials | 64 | -1.4 |
| Health Care | 31 | -1.36 |
| Industrials | 58 | 0.63 |
| Information Technology | 95 | 4.31 |
| Materials | 52 | -0.81 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.3 |
| Alibaba HK | 9988 HK Equity | -0.2 |
| JD.com HK | 9618 HK Equity | 0.3 |
| NetEase HK | 9999 HK Equity | 1.5 |
| Yum China HK | 9987 HK Equity | -0.4 |
| Baozun HK | 9991 HK Equity | -0.4 |
| Baidu HK | 9888 HK Equity | 5.1 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 0 |
| Trip.com HK | 9961 HK Equity | -3.6 |
| EDU HK | 9901 HK Equity | -1.7 |
| Xpeng HK | 9868 HK Equity | 6.9 |
| Weibo HK | 9898 HK Equity | 0.2 |
| Li Auto HK | 2015 HK Equity | 0.4 |
| Nio Auto HK | 9866 HK Equity | 1.4 |
| Zhihu HK | 2390 HK Equity | -0.7 |
| KE HK | 2423 HK Equity | -0.1 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0 |
| Meituan HK | 3690 HK Equity | 1.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 2.3 |
| SEMICONDUCTOR MANUFACTURI-H | 5.4 |
| ALIBABA GROUP HOLDING LTD | -0.2 |
| HUA HONG GRACE SEMICONDUCTOR | 5.4 |
| KINGBOARD LAMINATES HLDG LTD | 3 |
| KINGBOARD HOLDINGS LTD | -1.8 |
| YANGTZE OPTICAL FIBRE AND-H | 6.7 |
| MEITUAN-CLASS B | 1.3 |
| XIAOMI CORP-CLASS B | -1 |
| KNOWLEDGE ATLAS TECHNOLOGY-H | 7.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | 1.9 |
| SHANTUI CONSTRUCTION MACHI-A | 1.6 |
| BOE TECHNOLOGY GROUP CO LT-A | 9.2 |
| GIGADEVICE SEMICONDUCTO-CL A | -3 |
| ZHONGJI INNOLIGHT CO LTD-A | 4.1 |
| EOPTOLINK TECHNOLOGY INC L-A | 9 |
| MONTAGE TECHNOLOGY CO LTD-A | 4.7 |
| CAMBRICON TECHNOLOGIES-A | 7.7 |
| JCET GROUP CO LTD-A | 0.3 |
| VICTORY GIANT TECHNOLOGY -A | 9.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.78 versus 6.79 yesterday
- CNY per EUR 7.73 versus 7.75 yesterday
- Yield on 10-Year Government Bond 1.73% versus 1.72% yesterday
- Yield on 10-Year China Development Bank Bond 1.79% versus 1.78% yesterday
- Copper Price -0.13%
- Steel Price -0.10%
